A day after the U.K. lost its AAA credit rating from two ratings agencies thanks to Brexit referendum fallout, attention now turns to Brussels, where national leaders and the European Parliament gather to fight over the future of Europe.

THE HEAT IS ON IN BRUSSELS …

VIRTUALLY ALL PARTY, NATIONAL LEADERS ASSEMBLE IN BRUSSELS TODAY. It’s standard that national leaders caucus briefly with their party colleagues before heading into EU summits. Sometimes an opposition party will be invited along to join the elected leaders. Today, it’s different: Virtually everyone is here, so grave and yet thrilling is the threat of Brexit. Matteo Renzi is leading the optimists, telling his parliament, “Brexit can be a great opportunity for Europe.” http://reut.rs/28ZglPW

POWER STRUGGLE BETWEEN COMMISSION AND COUNCIL OVER BREXIT NEGOTIATIONS: The Commission believes only it has the resources to do the heavy lifting on both the U.K.’s exit plan, and in forming its new relationship with the EU. The Council, effectively, thinks the Commission’s federalizing tendencies can’t be trusted, so wants to undertake the political side of the negotiations itself.

PARLIAMENT WANTS BREXIT TALKS IMMEDIATELY:MEPs will vote on a resolution Tuesday calling for the U.K. to begin Brexit negotiations “immediately.”Party leaders representing a majority of MEPs have pre-agreed to support the resolution. http://politi.co/295VBtt

CAMERON WANTS A REPLACEMENT COMMISSIONER: The British prime minister told parliament: “I think we should try to seek a replacement because the fact is, we are a full member, a paying member of this organization until we leave, and we therefore should have a commissioner.”

THE UPSHOT: Both sides want something. That means neither Cameron nor his successor will likely get a replacement for Hill until they pull the Article 50 trigger. And if they do get one, you can be sure it won’t be in a plum post like the financial services one Hill held.

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WE HEAR — A PARLIAMENT COUP IN THE WORKS: There will be a Polish coup at the European Conservatives and Reformists (ECR) party group meeting this morning, according to POLITICO’s sources. Currently ECR is led by the U.K.’s Syed Kamall because the U.K. Conservatives are the biggest member party. We hear the second biggest national group, the Poles, want the Brits gone.

My sources say the goal is to claim posts like Vicky Ford’s leadership of the internal market committee. U.K. sources say nothing has changed since the referendum, so nothing should change in the group. Expect fireworks from 9 a.m. There may not be an ECR group by the time the fighting’s over.

STAY CALM — MERKEL IS HOLDING HER LINE: There was a lot of breathless reporting Monday about Angela Merkel’s thoughts, and supposed shifts in those thoughts. They were, they are, and they will remain middle-of-the-road. She’s not about to force Cameron on the Article 50 issue this week. And nor will she indulge any dithering beyond October by the Brexiteers, or waste any time in informal EU-U.K. talks between now and then. All of this is classic Merkel. Keep calm and carry on, Mutti whisperers. http://politi.co/28Y9uZT

EASTERN EUROPEAN MINISTERS CALL FOR JUNCKER TO QUIT: Witold Waszczykowski,Poland’s foreign minister, thinks “at least a part of the European leadership” should step aside. Waszczykowski told reporters Poles are “thinking about a new European treaty and to give the main power in the EU to the European Council, not the Commission.” Estonian president Toomas Ilves on Monday said Commission President Jean-Claude Juncker’s behaviour had been “abominable.” Czech Foreign Minister Lubomír Zaorálek said on Sunday he did not think Juncker was “the right man for the job,” adding “someone in the EU maybe should contemplate quitting.” FT | Bloomberg

RAJOY WORKS TO BREAK SPANISH DEADLOCK: He’s looking for a coalition of moderates, writes Stephen Brown. That could be either the Socialists in a grand coalition or Ciudadanos. With a shift in votes from Ciudadanos to PP, it looks like Obama guru Jim Messina’s work for Mariano Rajoy may have paid dividends. POLITICO | WSJ

SCHUMAN STATION IS CLOSED FROM 1 P.M. TODAY.

THE BRITISH WORD OF THE DAY IS ‘OMNISHAMBLES:’ Before there was the TV series Veep there was the British original The Thick of It. And that’s exactly what British politics has looked like since Friday morning, making a word invented by the show’s scriptwriters — omnishambles — the best one to describe the venomous power vacuum. http://bit.ly/28ZmFID

Quote du jour: David Cameron captured it perfectly when he said of new MP Rosena Allin-Khan, who was making her first appearance in parliament: “I’d advise her to keep her mobile phone on as she might be in the shadow cabinet by the end of the day.” http://politi.co/291KdxG

BREXIT FOR THE WORLD …

STOCKS HAVE WORST TWO-DAY RIDE SINCE 2008: Chancellor George Osborne’s effort to calm markets wore off after an hour, and investors completely ignored Boris Johnson’s claim of calm and stability. The pound sterling also slid to another 31-year low, of $1.30, before recovering slightly. http://reut.rs/28ZeZEi

EFTA SAYS THE DOOR IS OPEN TO UK REJOINING: The European Free Trade Association is the poor cousin of the EU, a looser and much smaller association of EU refuseniks. The group formed the original EU slow lane in the 1960s when Britain was a founding member, but now only Iceland, Liechtenstein, Norway and Switzerland remain.

ITALY MAY USE BREXIT TO PUSH THROUGH A BANK BAILOUT: 5 takeaways on a possible Italian rescue of troubled domestic lenders. Francesco Guerrera: http://politi.co/28WZGKY

FRANCE AND GERMANY RUSH TO SAFEGUARD THE EUROZONE: When Britain leaves the EU, the eurozone will for all practical purposes become the EU, writes Pierre Briançon. “France and Germany … feel the EU would not survive an unraveling of the monetary union, they are working hard to show that they’re intent on shoring up the single currency, implementing reforms that have long been on the table. There’s some urgency too. Investors have started to think that Italy, with its troubled banking system, might be the next domino to fall.” http://politi.co/28Z1QKs

US FOCUS IS TTIP, NOT UK: The United States is not currently considering negotiating a separate free trade agreement with the U.K., U.S. Trade Representative Michael Froman confirmed. But visiting Secretary of State John Kerry also warned against the EU against taking revenge for Brexit. http://politi.co/2939dUs

POLAND MOURNS BREXIT: A close ally leaves the rising power stranded. “The nation that most shares Warsaw’s pro-American and market-oriented vision for the EU — the largest nation outside the eurozone besides Poland — is on its way out,” writes Jan Cienski. “Warsaw will be left without an influential ally on issues as varied as keeping in place sanctions against Russia or watering down the integrationist ambitions of other Continentals.” http://politi.co/28ZK4sa

BREXIT FOR BRITAIN …

— Cameron will leave in September.

— Early election possible around October 13, depending on who replaces him.

A POLITICAL VACUUM AND AN IMPATIENT POPULATION: Ed Conway for Sky on why instability will reign until someone dares to step forward with a plan. Sky | Economist

HONEY, THEY SHRUNK THE CHANCELLOR: The Brexit result has exposed the chancellor of the exchequer as the Remain camp’s failed scaremonger-in-chief, and now failed market-calmer-in-chief. Silvia Sciorilli Borrelli: http://politi.co/28Zu0VE

Osborne ruled himself out of the running to succeed British PM David Cameron Monday, citing his strong support for the U.K. to remain in the European Union. http://reut.rs/29iTC1j

CAMERON’S POISON PILL — EU IS YOUR PROBLEM NOW: Leave-supporting MPs had a good reason to sign the ‘Save Dave’ letter on Thursday night. Cameron staying on would have forced him to do the dirty work of pulling the Article 50 trigger for Brexit. The Leavers also thought Downing Street had a plan for Brexit, despite repeated official insistence that there was no Plan B. Cameron made it clear Monday that he’d get the ball rolling by setting up a cross-department Whitehall negotiation team, led by Oliver Letwin. Apart from that, he is leaving it to the Leavers. Tom McTague for POLITICO | FT

TOP ECONOMISTS SAY BRITAIN HEADED FOR WORST ECONOMY SINCE WW II: John Llewellyn, former chief economist of the Organisation for Economic Cooperation and Development, said the U.K. was heading into recession with the Bank of England the only functioning part of government. “We are more worried — for the U.K., though importantly not for the world — than we were in 2008,” he said. “The scale of all this will start to unfold in coming weeks.” http://on.ft.com/291Aw23

MORE FARCE AS LEAVERS ACCEPT LARGE CHUNKS OF EU: Boris Johnson’s astounding ‘Britain will always be a part of Europe‘ opinion piece yesterday, in which his non-EU vision for Britain sounded exactly like its EU present (except for the magic disappearance of disliked rules), was just the warm-up act. Running a similar argument to Johnson, Jeremy Hunt, the British health secretary, called for a “Norway plus” option for the U.K., which would involve “full access to the single market with a sensible compromise on free movement rules.” The deal should then be put to another referendum, Hunt argued. http://bit.ly/28X4yj2

“In the Conservative Party, both Leavers and Remainers are settling into an understanding that actually, leaving means keeping quite a lot of the EU.” James Kirkup: http://bit.ly/29hDFbu

SCOTLAND SAYS NO, NO, NO, BUT CAN’T DO IT FOREVER: Angus Robertson, leader of the third biggest party in the U.K.’s House of Commons (the Scottish National Party which rules Scotland) told the parliament: “We have no intention whatsoever of seeing Scotland taken out of Europe … That would be totally democratically unacceptable.” Strong words, but tempered by another MP and former Scottish first minister, Alex Salmond, who conceded that in the end Scotland could not block Brexit forever. “The Scottish parliament can block but Westminster can then override,” Salmond said. http://bit.ly/28YQUOH

A more hopeful take from Fergus Ewing, who flew to Luxembourg to sound out sentiment to Scotland’s options for staying in the EU at a Council meeting and said he liked what he was told. “There is no mechanism for Scotland to remain part of the EU with Britain coming out, but the EU has shown itself to be adaptable and flexible,” he told Reuters. http://reut.rs/28ZShfN

INSIDER ACCOUNT OF CORBYN ON POLITICAL LIFE SUPPORT: At an extraordinary meeting of the parliamentary Labour Party, MP after MP lined up to attack the Labour leader and demand his immediate resignation. Corbyn point-blank refused. Tom McTague explains how it went down http://politi.co/28XZN9H

FORMER BLAIR MINISTER DENIS MACSHANE: “When Labour goes into opposition … it digs a big sink hole and falls in for a few years usually under a leftist leader who speaks to activists not voters. The new shadow cabinet is beyond parody. But you can’t beat someone with no one and there is no impressive alternative.”

HOW THE NEW PRIME MINISTER WILL BE SELECTED: Nominations close Thursday. Next Tuesday, Conservative MPs will begin choosing a shortlist of two candidates for party members to choose between. The new leader is expected to be known September 2. Darren McCaffrey http://bit.ly/28XLu52

LIBERAL LEAP FORWARD: At least someone’s doing well out of Brexit. The U.K.’s Liberal Democrats, a former governing party, have been a tiny sidelined rump in both the British and European parliaments over the last couple of years. Step forward Tim Farron and his decision to explicitly campaign to reject the Brexit vote. The result: The party says it has put on 6,000 new members in two days. http://bit.ly/28Y8wwZ

INEQUALITY NOT PERSONALITIES DROVE BREXIT POPULARITY: “Voting patterns … paint a picture of a country sharply divided along three dimensions: social class, generation, and geography. On average, for example, across the 20 authorities where support for remaining in the EU was strongest, 45 percent of voters have a university degree, 42 percent are professionals, 26 percent describe themselves as ‘non-white,’ only 11 percent are pensioners and the median income is £27,000. But across the 20 authorities where support for leaving the EU was strongest, only 16 percent of voters have a degree, only 23 percent are professional, less than 5 percent are non-white, nearly 20 percent are pensioners and the median income is £18,000.” Matthew Goodwin takes a close look at what the voting numbers mean: http://politi.co/290Nm2e

TOP BREXIT READS …

London falling: life after Brexit. Daniel R. Keleman on the U.K.’s “historic act of self-harm.” http://fam.ag/28YaQE7

EIB — NEW CRISIS AND RESILIENCE INITIATIVE: It’s for the Western Balkans, North Africa and the Middle East (sorry Britain — you’ll have to sort yourself out!) and European Investment Bank President Werner Hoyer will present it to EU leaders today.

ECB CONFERENCE PANEL SCRAPPED: The Wednesday panel would have featured Janet Yellen, Mario Draghi and Mark Carney. Funnily enough, they’re all very busy right now. http://politi.co/29aek4r

US 2016 …

BIGGEST ABORTION RIGHTS VICTORY IN A GENERATION: Hillary Clinton celebrated the ruling, which strikes down burdensome requirements on abortion clinics that would have had the effect of restricting access. Donald Trump remained silent.http://politi.co/292XuVQ

Clinton also ripped into Trump’s Brexit reaction: “He tried to turn a global economic challenge into an infomercial,” Clinton said.

FEW WANT TO SPEAK AT TRUMP’S CONVENTION: Alex Isenstadt on the ever-expanding no-show list for the Republican convention in three weeks in Cleveland. http://politi.co/28Zqyvd

BIRTHDAYS: NOS’ Chris Ostendorf; Giovanni La Via MEP; Leonard Orban, former European commissioner; Diana Wallis, president of the European Law Institute; Catherine Stewart celebrated yesterday. John McTernan also grinned and bore it through his post-Brexit birthday.

THANKS to Zoya Sheftalovich, Florian Eder, Chris Spillane.

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